Distressed Property Market and NAMA

By

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CHAPTER 11

Background1

NAMA2

Introduction2

Irish SPV4

Aim5

Chapter Structure5

CHAPTER 26

Introduction6

Crossrail8

The Knowledge Economy11

Transport12

Housing: Exploding the Myths14

Work Out Models16

Straight refinance18

The “sell now” model18

The “work to sell” model19

Joint ventures20

Aggre gate and sell20

Debt for equity swaps21

Mezzanine financing21

Real Estate Confidence versus Consumer Confidence22

CHAPTER 325

Introduction/Methodology25

Role of NAMA27

Functions of NAMA29

Loan purchase31

Payment for loans31

CHAPTER 433

Introduction33

Impact measurement methodology34

Findings36

Market for Commercial Property38

CHAPTER 546

Introduction46

Stakeholder47

Case study49

REFERENCES51

CHAPTER 1

Background

The history of real estate opportunity funds is a twenty-year search to take advantage of cycles of distress and the scarcity of capital. Real estate opportunity funds have evolved in response to capital market dislocations and illiquidity over the course of the market cycles. Cycles of distress and scarcity of capital have affected the geographic distribution of funds over their short history. Opportunity funds were first created in the late 1980s to take advantage of the distress following the S&L crisis, with the Resolution Trust Corporation (RTC) as one mechanism to transition broken capital structures back to the functioning marketplace. T (AICPA, 1988, pp.96).

The Irish government continues to seek ways to generate liquidity, and the National Asset Management Agency (NAMA) is expected to play a central role as it continues to work through its real estate loan portfolio. NAMA was created in November 2009 when it acquired the debt of Allied Irish Bank, Anglo Irish Bank, Bank of Ireland, EBS Building Society and Irish Nationwide Building Society. As of year-end 2011, it had a loan book of €74.2 billion and had sold€4.6 billion of loans over the prior two years. NAMA is specifically looking at ways to provide financing to purchasers of property that is currently under control by NAMA debtors or receiverships engaged by the agency. In December 2011, NAMA sold a€600 million (£515 million) nominally-valued loan portfolio to Orion Capital for €326 million (£280 million), reflecting a 46 percent discount (Balsam, 2003, pp.71-97).

NAMA

Ireland's National Asset Management Agency (NAMA) has been a fixture of real estate news since its creation in 2009. Established to address problems in the banking sector caused by excessive property lending, the agency is now shifting gears from loan acquisition to asset management. On October 4th, John Mulcahy, Head of Asset Management at NAMA, flew to London to have a conversation with ULI. Mr Mulcahy was formerly Chairman of Jones Lang LaSalle in Ireland, and had been brought in by the Irish government to help establish their loan methodology. Subsequently, he was asked to help run the new agency, being ultimately responsible for the portfolio. The soldout breakfast event was hosted by Lazard & Co. and sponsored by Eastdil ...